The 2023Q4 performance exceeded expectations, and the equity incentive target was achieved. The new round of equity incentives showed growth confidence. The company announced 2023 revenue of 13.45 billion yuan/yoy +16.05%, net profit of 1.28 billion yuan/yoy -15.4%, net profit of 1.23 billion yuan/yoy -13.1% after deducting non-return to mother net profit of 1.23 billion yuan/yoy -13.1%, and exchange earnings of 15 million yuan/yoy -91.7%. Among them, 2023Q4 achieved revenue of 4.89 billion yuan/yoy +95%, and net profit of 420 million yuan/yoy +13.2% to mother. The company's dividend payout ratio for 2023 was 32.1%. Overseas demand recovery+customer expansion+innovative business growth exceeded expectations, and Q4 shipments reached a record high. Considering that the profit of the innovative business is still climbing, we lowered our 2024-2025 profit forecast and added the 2026 profit forecast. We expect 2024-2026 net profit of 14.8/17.1/19.3 (previous value of 16/20) billion yuan, yoy +15.7%/+15%/+13.2%, corresponding EPS of 2.16/2.49/2.82 yuan. The current stock price corresponds to PE 12.2/10.6/9.4 times. The long-term logic of performance growth will not change and be maintained.” “Buy” rating.
The TV business is growing rapidly, and the market share of interactive tablet customers continues to lead. The innovative display business is growing at an impressive sub-business: smart interactive display/innovative display (including the three major brands) /smart TVs achieved revenue of 38.4/9.6/7.29 billion yuan in 2023, yoy -9%/+128.9%/+32%, accounting for 28.6%/7.2%/54.2%, and shipment volume yoy +80.4%/+272.33%/+37.3%. Among them, interactive tablet revenue YOY -32.56%, shipment volume YOY -23.5%, professional display equipment YOY +173.9%, e-sports display revenue YOY +169.97%, and shipment volume of 1,429,000 units/yoy +241.39%. By region: 2023 overseas/domestic revenue of 112.9/2.15 billion yuan, yoy +17.9%/+7.3%, accounting for 84%/16%. Pumi, the largest customer of interactive tablets, continues to lead the market share, with a global interactive tablet share of 17.4%/21.1% in 2023/2023Q4. KTC Display ranks 7th in sales in the domestic online retail market and 4th in the e-sports segment. Innovative businesses actively explore new markets overseas. Smart TVs are expanding into the North American market while demand is strong in the Belt and Road region, ranking fifth in shipments in 2023 (6th in 2022).
The cost ratio remains stable, and the global layout further reduces customer concentration, and the impact of the upward cost cycle on the company's profit is manageable: in 2023, the company's gross profit margin was 17.83% /yoy-3.3pct, and the net interest rate was 9.55% /-3.55pct. Smart interactive display/ innovative display/ smart TV gross profit margin 25.9%/14.4%/15.4%, yoy-3.24pct/-4.99pct/-2.09pct. Further optimization of the business structure and stabilization of the cost side in 2024 are expected to lead to an increase in profitability. The cost rate remains stable: in 2023, the company's sales/management/R&D/finance expenses rate 2.3%/2.4%/4.6%/-0.6%, yoy+0.11pct/+0.06pct/+0.19pct/+1.22pct.
The company's top five customers accounted for 28.9% of revenue in 2023 /yoy-8.58pct, and the customer development logic was further verified.
Risk warning: Prices of raw materials have risen sharply, there is a risk of exchange rate fluctuations, and the expansion of innovative categories falls short of expectations.